Pimlico Plumbers has lost a court battle over the status of its workers, in the latest legal ruling on employment status in the gig economy.

It came as the government released a report warning that “unscrupulous” employers were in a position to exploit low-paid and low-skilled workers.

Plumber Gary Smith, who worked for Pimlico Plumbers for six years until 2011, had already won an employment tribunal challenging the firm’s view that he was self-employed.

The court of appeal rejected an appeal lodged by Pimlico Plumbers, founded by the Conservative party donor Charlie Mullins.

The firm argued Smith was an “independent contractor” rather than a worker or employee.

Smith’s solicitor, Jacqueline McGuigan, said the ruling held wider implications for gig economy firms such as Deliveroo or Uber, both of which are embroiled in rows over employment status.

“We are absolutely delighted,” McGuigan said. “The decision brings welcome clarity to the issue of employment status relating to work in parts of the economy.”

Speaking outside court, Mullins said: “I am happy. This gives some clarity. We will be looking at the full judgment and there is a good chance we will appeal to the supreme court.”

The UK’s department for Business, Energy and Industrial Strategy (BEIS) said: “We are determined to make sure our employment rules keep up to date to reflect new ways of working, and that’s why the government asked Matthew Taylor to conduct an independent review into modern working practices.”

But BEIS immediately came under fire from the Green party for failing to publish a report that warned in December 2015 that gig economy workers were at risk of exploitation.

A string of labour disputes have since arisen as staff from firms such as Uber, Deliveroo and CitySprint have fought to have their status upgraded to that of workers or employees.

The report, commissioned by the Conservative-Liberal Democrat coalition, warned that a lack of clarity over workers’ status was allowing “unscrupulous” employers to take advantage of workers.

It explored possibilities including “flipping” the burden of proof in labour disputes, so that employment tribunals would consider complainants to be full employees unless a different relationship could be established.

“Some of the more unscrupulous employers will also have to start to take notice if a significant proportion of their workforce stand up for what is rightfully theirs as a result,” it said.

The Green party said the government’s failure to publish the report since it was completed in December 2015 had increased uncertainty for gig economy workers and forced them to take the risk of going to tribunal.

“It is shameful that Tory ministers have sat on the findings of the coalition’s review into employment status,” said Green co-leader Jonathan Bartley, who wrote to the prime minister in October calling for the report to be published. “As they did so workers everywhere have been living in increasing insecurity and left to fend for themselves.”

Asked why the report had been delayed, BEIS said it had been commissioned to “explore future options” and would help inform the Taylor review into employment status, which was launched a year after the report was published.

Employment law experts said the Pimlico Plumbers ruling would have significant implications for the ongoing dispute over employment status.

Natalie Razeen, employment law solicitor at Russell-Cooke, said the decision “suggests that courts are alive to the inequality of bargaining power faced by individuals in these circumstances.

“This serves as yet another reminder to employers that they should consider the question of employment or worker status carefully.”

Marian Bloodworth, employment partner at Kemp Little, said the judgment highlighted the need for legal clarity around the status of those working on a self-employed basis and in the gig economy.

“Tribunals and courts are increasingly willing to look behind the labels businesses use for their staff and will take into account the reality of the working arrangements and relationships,” she said.

The ruling is the latest decision to be handed down in a series of court challenges launched by gig economy workers who feel they should get the same benefits as full-time employees, such as holiday pay and pension.

A cycle courier working for the delivery firm CitySprint won the right earlier this year to paid holidays and minimum pay.

Food delivery firm Deliveroo was told last year it must pay its workers the minimum wage unless they are ruled self-employed by a court or HM Revenue & Customs.

The GMB union is supporting a group of Deliveroo couriers in Brighton who have served two weeks’ notice to their employers to offer better pay and more hours.

Ride-hailing app Uber lost the right to designate its drivers as self-employed last year, in a ruling it has since appealed against.

Maria Ludkin, the GMB’s legal director, said: “This case, like the Uber case last October, is yet another victory for the bogus self-employed who have been treated appallingly by their employer.

“All they want is basic employment rights as are enjoyed by the majority, including the right to be paid a minimum wage and holiday pay.”